If my Bitcoin investment climbs to $100,000, but my income remains under $50,000, will it still be tax-free as a long-term investment of more than one year for individuals in the 15% tax bracket?
In 2017, If your combined taxable income including your long-term capital gains falls below $37,950 as a single filer or $75,900 if filing jointly with your spouse ($38,600 and $77,200 in 2018) then your long term capital gains will be taxed at 0%.
When looking at brackets, your ordinary taxable income is used first and then the long term capital gains- if your total taxable income falls in the lower brackets then long term capital gains is 0 but if your capital gains takes you to higher brackets then higher rates apply- 15% and then at the highest brackets 20%. So, for example if you had $0 ordinary income and had a very large long-term capital gain, say $1 million for the sake of this example- it does not mean you will be taxed at 0% rate. You will pay capital gains taxes between 0% and 20% for various portions of your capital gains.
The answer to your question lies in the tax bracket you will be in, in the year of the sale. If the sale and the capital gains attributable to the sale along with your other income will keep you in a 15% bracket, and capital gain should be free. However, if it takes you up over the 15% bracket, partly capital gains will be taxable. Hope this helps and good luck
All things being equal, the short answer is probably. Tax laws and brackets could change but assuming that they don't you'll likely have no capital gain to tax.
The new law retains the previous (current) law's maximum tax rates on net capital gains and qualified dividends (0%, 15%, and 20%) for those who fall into the lowest two brackets. The thresholds for the brackets will depend on your filing status (married filing jointly, married filing separtely, filing as a single taxpayer). So, if your combined adjusted gross income is at or below $77,000 for joint filers or $38,500 for single filers, then you'll likely fall into one of the two lowest tax brackets qualifying for the 0% capital gain formula.
Now, whether or not you have any gain from a speculative investment is an entirely separate matter. Good luck.
No. To oversimplify: If you sell your bitcoins and book a $100,000 profit then your taxable income will be $50,000 salary plus $100,000 Schedule D income -- $150,000 total. That will put you into a bracket where your gains will be taxed.
Your capital gains rate is based upon your income, not investment gains. In other words, the capital gains, whether short or long term will not be added to your income to determine your tax bracket. So if your long term capital gains rate is 15% or even 0%, that is the percentage taxes on the gains are calculated. Your short term capital gains would be taxed at your income tax rate. Now, if you have losses on other investments, you may want to book those to offset any gains you may have to pay because you net all of your gains & losses for the year.
So you net all of your long term realized (sold) investments against each other & your short term gains & losses against each other. Then you have either a net long term gain or loss, and a short term gain or loss. If both gains, then you simply pay taxes at their appropriate respective rates. If different, then you net those two together for either a net long or short term gain or loss. So if you do proper tax planning before year-end, you will pay far less tax than you may think in taxable accounts.
Hope this helps and best of luck, Dan Stewart CFA®